The BMW group is set to invest a total of one billion US dollars over four years in the American market. The resources will be channelled towards a new adminstrative and training centre in New Jersey, increasing the sales network and broadening production in the Spartanburg facilities.

These are all strategies that should take advantage of the current weak dollar compared to the euro. Currently the BMW factory in South Carolina assembles about 160,000 vehicles a year, but with the new investment estimates are up arounf 240,000 vehicles by 2012. To the X5 and X6, produced only in the US, the new X3 will be added, currently manufactured in Austria. 500 new jobs should also be created in the new complex.

BMW colonisation of the US doesn’t stop here though: the general headquarters at Woodcliff Lake in New Jersey grew by 60 percent in 2008 with a 100 million dollar investmen. Now about 1,000 staff members work there and another 170 million dollars will be spent by the end of the year for distribution measures in Pennsylvania and Illinois. This should take BMW to six regional distribution centres on US ground. BMW has been steadily growing in this market for the last 16 years: in 2007 alone more than 336,000 vehicles were sold.

BMW US president Ian Robertson has stated that “the investments are a clear sign of our strong trust in the potential of the American economy. We know we need to invest in the biggest market in the world if we want to have success on the world ladder. Despite the current weakness, long term prospects in the US are positive”.

That's interesting. From the last article I read, I thought they were "downsizing" their U.S. commitment. Downsizing wasn't the word, but I cannot remember the catch-phrase (a business term) that they used.

That's interesting. From the last article I read, I thought they were "downsizing" their U.S. commitment. Downsizing wasn't the word, but I cannot remember the catch-phrase (a business term) that they used.

They were shifting some of the production slots from the US to more budding economies like the Russia and some other place I don't remember.

That's interesting. From the last article I read, I thought they were "downsizing" their U.S. commitment. Downsizing wasn't the word, but I cannot remember the catch-phrase (a business term) that they used.

Divest?

Regarding the article- IMO that's pretty smart of BMW to invest. Not only will they be able to take advantage of the rising Euro.

Anyone who can transition seamlessly from defending one vendor and bashing another vendor to bashing the one he formally defended and defending the one he formally bashed has a instant credibility problem.

Regarding the article- IMO that's pretty smart of BMW to invest. Not only will they be able to take advantage of the rising Euro.

Maybe so. I don't recall. All I know is that it was a word I had never heard before, and had to look it up. I'm gonna search.

EDIT:

No, the word was "decoupling." The article states that "BMW Shifts Cars from U.S.: A Sign of Decoupling?"

While not definitive, here is an interesting way to look at the “decoupling” discussion: BMW is diverting cars from the U.S. market (a market it still expects to increase sales in) to emerging market countries due to the weak dollar and slowing economy.

From the WSJ:
FRANKFURT -- BMW AG said it is diverting cars from the U.S. to faster-growing emerging markets, as the slowing U.S. economy and weak dollar dented first-quarter earnings at the luxury German car maker and its rival Daimler AG…
…BMW Chief Executive Norbert Reithofer said in a conference call Tuesday that the company decided late last year to look at redirecting cars between markets to mitigate currency impacts. Referring to the U.S., Mr. Reithofer said BMW is reallocating cars to more-profitable markets such as China and Russia. The weak dollar, in particular, makes German cars less profitable for BMW to sell in the U.S., because its construction costs are in euros. A spokesman for the company declined to say how many cars have been redirected from the U.S. He stressed that BMW still hopes to increase U.S. sales, though less ambitiously. In 2007 BMW sold 336,000 BMW, Rolls Royce and Mini vehicles in the U.S.”
BMW is basically saying that the while the U.S. market is still important, it needs to shift some of its focus elsewhere in order to continue to grow its business. I.e., it has to reduce its earnings dependence on the U.S. While not necessarily an example of “according to Hoyle decoupling”, it is a sign of how foreign companies (and their economies) can use emerging markets to compensate for a slowing U.S. economy and a weak dollar.

From my perspective, decoupling isn’t about whether the U.S. necessarily loses its position as the single largest consumer market, but whether the consumer markets of Western Europe and emerging market countries can (on aggregate) generate enough profits to compensate or at least mitigate the impact of economic slowdowns, currency weakness, etc. in the U.S.

Decoupling shouldn’t be discussed in terms of whether or not a foreign economy or company can thrive without the U.S., but whether or not their dependence on the U.S. is waning. Decoupling will happen very slowly and will be the cumulative effect of the actions of companies and economies reducing their dependence on the U.S. market; the discussion shouldn’t be around where or not it has happened but whether or not it’s “happening”.

I.e. tracking things like the recent actions of companies like BMW and Daimler (DAI), observing their success (if any) and seeing if other companies and economies follow suit.

Decoupling won’t be a sudden occurrence; it will be a slow and gradual evolution.

hmm, if it were up to me, the money would go towards broadening up the asian market (like ferrari and GM). Though bmw would definitely not get as much of their money worth, the current exponential expansion of countries like japan, china, and korea are a much better investment than the impending (or already) apex of US economy.

hmm, if it were up to me, the money would go towards broadening up the asian market (like ferrari and GM). Though bmw would definitely not get as much of their money worth, the current exponential expansion of countries like japan, china, and korea are a much better investment than the impending (or already) apex of US economy.

You are right. But unlike America most Asian countries have very high tariff on import specifically cars. Here in the America we are very lucky to have somewhat of a free market that allows all kind of choices for consumers. In Asia most government are still growing so they have a very tight control over import.

BMW is not in the same market as GM or Ferrari. GM is trying to make cheap cars for everyone while Ferrari is trying to sell its cars to CEO. BMW focus customers are upper middle class who are growing in numbers and most people in that segment are familiar with the BMW brand. German brands as a whole are very highly respected in China. BMW is investing lots of money in Asian market (read China) and holding its own very well there. In China BMW biggest competitor is Audi. For some reason Chinese loves Audi. (SRC: google BMW China or Audi)

Also, the Asian market specifically Japanese market is very hard to break. Check BMW Japan you would be amazed at the standard tech in those cars as compared to US cars. In Japanese they tend to buy ~90% local cars versus imports.